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HQ 087021


July 24, 1991

CLA-2 CO:R:C:M 087021 MBR

CATEGORY: CLASSIFICATION

TARIFF NO.: 9503.70.80

Mr. W.J. Gonzalez
Trans-Union Customs Service, Inc.
8939 So. Sepulveda Blvd, Suite #206
Los Angeles, CA 90045

RE: Revocation of NY 838831 and NY 849878; Low Power Transceivers; "Walkie Talkies"; Toy Set

Dear Mr. Gonzalez:

We have been asked to reconsider your ruling NY 838831, dated April 5, 1989, concerning the classification of low power transceivers for the amusement of children, under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA).

FACTS:

The merchandise at issue are low-powered transceivers ("walkie talkies"). Counsel has submitted a representative sample which is made in China by "Playtime," "The Toy Company That Cares." They operate on a frequency of 49.82 - 48.90 megahertz ("MHz"). They have flexible antennas, a send button, a morse code button, volume control and a plastic belt clip. They are sold in sets of two. Each transceiver requires a 9 volt battery. The housing has colorful blue highlighting, false brackets and false screws, a sticker with the AT&T logo (new models no longer have the AT&T sticker), and is constructed entirely of plastic. The packaging states: "For ages 5 and up." These low-powered transceivers are marketed for the amusement of children. Our research indicates that these have a retail price of aproximately $5.00. Ruling Letters NY 838831, dated April 5, 1989, and NY 849878, dated March 8, 1990, held that the instant merchandise was classifiable under subheading 8525.20.20, HTSUSA, which provides for low powered transceivers.

ISSUE:

What is the classification of low-powered transceivers ("walkie talkies") designed for the amusement of children, under the Harmonized Tariff Schedule of the United States Annotated

LAW AND ANALYSIS:

The General Rules of Interpretation (GRI's) to the HTSUSA govern the classification of goods in the tariff schedule. GRI 1 states, in pertinent part:

...classification shall be determined according to the terms of the headings and any relative section or chapter notes...

These "walkie talkies" are low power transceivers which operate on frequencies from 49.82 to 49.90 MHz. They are designed primarily for the amusement of children, and are sold in toy stores and major department stores (in the toy section). Therefore, they are prima facie classifiable under two headings, which are 9503 and 8525, HTSUSA. These headings describe:

8525 Transmission apparatus for radiotelephony, radiotelegraphy, radiobroadcasting or television, whether or not incorporating reception apparatus...:

8525.20.20 Transmission apparatus incorporating reception apparatus: [t]ransceivers: [l]ow-power radiotelephonic transceivers operating on frequencies from 49.82 to 49.90 MHz

9503 Other toys; reduced-size ("scale") models and similar recreational models, working or not; puzzles of all kinds; and accessories thereof:

9503.70.80 Other toys, put up in sets or outfits, and parts and accessories thereof: [o]ther: [o]ther

Subheading 8525.20.20, HTSUSA, falls within Section XVI. Section XVI, Legal Note 1(p), states:

1. This section does not cover:

(p) Articles of chapter 95.

Therefore, articles which are described both in Section XVI and Chapter 95, HTSUSA, are classifiable in Chapter 95.

The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) to Chapter 95 state:

This Chapter covers toys of all kinds whether designed for the amusement of children or adults.

Furthermore, the EN regarding heading 9503, HTSUSA, page 1588, states:

Certain toys (e.g., electric irons, sewing machines, musical instruments, etc.) may be capable of limited "use"; but they are generally distinguishable by their size and limited capacity from real sewing machines, etc.

Although these low power transceivers are of a comparable size to transceivers capable of uses other than amusement, the instant merchandise is clearly capable of only an extremely limited capacity. Upon inspection of the merchandise, Customs found that these transceivers have an extremely limited effective range (approximately 92 yards, outdoors, when in line-of-sight). Furthermore, although the housing has an appearance of durability, upon closer inspection, it is clearly only designed to appear to have durable features. The fact that AT&T has given permission for a sticker bearing its logo to be placed on the merchandise does not persuade us that the merchandise is other than solely designed for the amusement of children (the new models no longer have the AT&T logo).

Counsel argues that these "transceivers are comparable in size and capabilities to any other low-power radiotelephonic transceivers which operate within the specified frequency range." If this is the case, then transceivers in this frequency range cannot be otherwise than designed exclusively for the amusement of children or adults, and therefor properly classifiable under the provision for toys. However, no proof of this fact has been provided. Therefore, we believe that there may be low-power radiotelephonic transceivers which operate on frequencies from 49.82 to 49.90 MHz, designed for uses other than amusement. These would be distinguishable by their durable construction, transmission range, design features, intended uses, and commensurate increased cost.

Counsel has cited numerous TSUS court opinions. However, in fact, these TSUS cases focused on whether the article in question was chiefly used for the amusement of children, and thereby classifiable under the toy provision. See Western Stamping Corporation v. United States (Louis Marx & Co., Inc., Party in Interest), C.D. 3554 (1968). It is Customs position that the instant merchandise is principally used for the amusement of children and is not an article of utility, and is therefore not classifiable in Section XVI. See United States v. Louis Wolf & Co., 26 CCPA 243, 246.

Further, see HQ 087305, dated September 7, 1990, for a similar holding regarding similar merchandise.

HOLDING:

Low powered transceivers of a similar design and construction are designed for the amusement of children and are therefore properly classifiable within subheading 9503.70.80, HTSUSA, which provides for toys put up in sets. The rate of duty is 6.8 percent ad valorem.

EFFECT ON OTHER RULINGS:

For the reasons stated above, NY 849878 (dated March 8, 1990), and NY 838831 (dated April 5, 1989), are revoked under authority of Section 177.9(d), Customs Regulations. The instant ruling will not be applied retroactively, and will not, therefore, affect past importations of your client's merchandise. We recognize that pending transactions may be adversely affected by this revocation, in that contracts for importations arriving at a port subsequent to the issuance of this ruling will be classified pursuant to this ruling. If such a situation arises, your client may, at its discretion, notify this office and apply for relief from the binding effects of the decision as may be warranted by the circumstances.

Sincerely,

John Durant, Director

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